2026-27 Post-Budget Reflections Webinar - Sneak peek

You won't want to miss this bonus episode, where you'll get a sneak peek behind the closed doors of this week's member-only webinar: Federal Budget 2026–27 Reflections & Insights.

In the webinar, Tim Sandow, CTA, facilitates a panel of experts:

• Julie Abdalla, FTI, Head of Tax & Legal, The Tax Institute
• Jane Harris, CTA, Brown Wright Stein Lawyers
• Chris Jenkins, ATI, account.able advisory
  
  

You'll hear the first 20 minutes of the webinar, the panel discusses the recent Federal Budget, highlighting initial reactions, economic context, and implications for taxpayers. Key measures such as changes to the CGT discount and negative gearing are explored, with a focus on how these changes will affect client behavior and the broader economic landscape.

For a deeper dive into what the Budget means for you and your clients, and to access other member-only insights and resources, including the Federal Budget 2026-27 report, become a member of The Tax Institute. Learn more: https://www.taxinstitute.com.au/membership/benefits

For more information about The Tax Institute: https://www.taxinstitute.com.au/

Transcript

Julie Abdalla: 0:08

Hello and welcome to TaxVibe, a podcast by The Tax Institute. I'm Julie Abdalla, head of tax and legal at The Tax Institute. In this bonus episode of TaxVibe, you'll get a special insight into our post Federal Budget reflections, sneak peek behind the closed doors of our member only webinar to see the full webinar and access other member only insights and resources. Become a member of The Tax Institute. Head to our website to learn more. We hope you enjoy this episode of TaxVibe.

Tim Sandow: 0:38

Well, good afternoon, and welcome to part one of The Tax Institute's webinar series addressing the measures that were announced last night in the Federal Budget. My name is Tim Sandow. I'm the president of The Tax Institute, so I'll be chairing and facilitating the panel discussion. Before we kick up today. I'd also like to draw your attention to the Federal Budget 26-27 report that we produced overnight for members only. The team worked a very long night, so Julie has just had her, I don't know how many coffees. The report itself is now available to be accessed via the Federal Budget site, on our website, they can access the report on the homepage, the report was also emailed to you directly, and please note that members will need to log on to access the report. There's no PowerPoint for today's webinar. There's a second webinar tomorrow, which will go into a very deep dive on the detail of the measures. Today's session is very much about our initial reactions and thoughts, and particularly, what are we going to be talking to clients about? Because no doubt, all of us have got a question from a client already, and probably had questions over the last week about what do you think is going to think is going to happen? I'm very pleased today to be joined by our panel. Julie Adella, FTI, from The Tax Institute. Julie is the head of tax and legal at The Tax Institute and leads the tax policy and advocacy team. Jane Harris, CTA is a Senior Associate, Brown Wright Stein Lawyers, with over 15 years experience. Chris Jenkins ATI, now this is amazing. We rang Chris at about lunchtime yesterday and said, Would you be interested in sitting in a panel, because Scott's sick. And Chris said, absolutely. So Chris. Thank you very much for joining us. Chris is a director of account.able advisory and a chartered accountant with 15 years in public practice. So, let's get into it. So, we saw the budget last night. Sometimes, I think the last couple of years, we've sat here and we thought there's there's nothing to talk about. There were no tax measures, and sometimes it's careful what you wish for. But we did see a budget last night, which is addressing some, some issues. So Julie, what were your initial thoughts when you saw the budget?

Julie Abdalla: 2:38

There were some surprises in there, that's for sure. Thanks, Tim, in the context that we're living in very difficult economic and fiscal pressures, it was an ambitious budget. I think we saw some big tax measures announced. Some of them did come as a surprise, some bombshells in there, but a lot of that had been widely anticipated ahead of the budget. I think it's very difficult to give a balanced view about a number of, in a way, isolated measures. So we do want to commend the Treasurer. It does take a lot of will and expenditure of political capital to be able to come out and address big ticket items, like some of the measures that we'll talk about today, but I think it is indicating that we're on the road to reform. I wouldn't quite call this a tax reform package, as it has been described in the budget. These are a series of tax changes, and I think what we're lacking still at this point is that vision for the future, something clearly articulated by the government about where we're going with the tax system and how these measures play into that.

Tim Sandow: 3:54

Yeah, I think that's really interesting, Julie, because you and I have been at Parliament House in Canberra last year at various tax reform roundtables. You and Scott were down for the MacKinnon Institute in Melbourne a couple of weeks ago. We've been advocating for a long time about holistic reform. I probably echoed that comment about it's nice to see a start. We'd always sort of hope that a government with such a large majority would actually use some of that majority and start addressing some of these intergenerational and other issues, but thoughts on whether is this, is this just sort of a first step, or do you think this is the end game?

Julie Abdalla: 4:29

I would hope it's the first step, not the end game. These changes are significant, and they will have huge implications for a lot of taxpayers, but they are isolated to certain parts of the system and to certain kinds of taxpayers, so they don't go so far as to look at the system a bit more holistically and tie in with other areas of the tax system and the broader system. So I think it is a positive step that the government is being ambitious and dealing with these challenging issues, I think there is a bit of apprehension or concern that some of these measures are going to introduce quite a bit of uncertainty and might have a counter intuitive effect when it comes to things like fairness, and I think we'll come to that a bit later, but it is hopefully a positive step in the right direction. The treasurer has described it as the hard road of tax reform, and I think we're on that journey.

Tim Sandow: 5:28

Yeah, I think, I think probably still an over reliance on income tax, and we haven't really addressed that broader issue of consumption taxes and broader tax reform to really, I guess, explore what's possible. Chris, I might turn to you now. So, I mean, I guess all of the stuff we saw in the budget is in the context of a broader economic uncertainty in the world. We've got obviously, the war in Iran is disrupting global supply chains and fuel and we can see a lot of money being spent in the budget to try and shore up fuel supplies. I thought it was really interesting in the budget that they talked about modeling at about $104 a barrel for oil, but they'd actually done models at$200 a barrel as well. So we can see that there's still that sort of increase in inflation, slowing in growth

Chris Jenkins: 6:17

and the uncertainty as well

Tim Sandow: 6:19

and the uncertainty as well. But I think it was, for me, it was just for me, it was just really interesting thinking that they'd actually not just done the modeling. They actually talked about doing the modeling at $200 a barrel and a 7% inflation rate, which my understanding with these ships that are coming through the Strait of Hormuz is that they travel about the speed of a bicycle. So it means that there's going to be a huge lag. Even if the war officially ended tomorrow, there's a huge lag over months before we get back to whatever the new normal is, Chris in your client base, what are you seeing? What are your clients worried about?

Chris Jenkins: 6:48

Everything. I think that given the economic uncertainty that everyone's facing at the moment, introducing quite broad stroke tax changes is only fueling that uncertainty. I think that there is a resistance, I suppose, to dive into of CapEx or investing into whatever it may be, whether that's a financial market investment or within their own business. I think now that's only going to get more confusing, because people are like, Well, I was planning to buy this in my company yesterday, because that's what my advisor told me to do. And now it's like, well, hang on, does that still make sense? And so I think we're going to see, in my opinion, I think confidence will be quite heavily hit by the announcements that were made. And unfortunately, I think that, to Julie's point, the headline of the budget was that it was one of reform and resilience. Change and resilience may be a truer thing, because I don't see these are reforms. These are changes that are altering where tax goes. I don't think that the labor, as in the tax on labor, the labor force really shifted. So we're still relatively reliant on PAYG and individual taxpayers, but we also now have this rather large chunk being taken out through the trust, 30% tax and on CGT.

Tim Sandow: 8:05

Yeah, that's right, Chris, so we're into discussion around some of the more specific measures in a minute. But Jane, your initial thoughts on the budget?

Jane Harris: 8:12

Yeah, I echo what Chris is saying. There's still a lot of headwinds out there for small and medium businesses in particular, but large businesses as well. And I think that this budget bears out a lot of the concerns that we've seen the ATO raising in the last 12-18 months, two years, particularly around the use of trusts, the use of corporate beneficiaries, and the way that those taxes are flowing, and also intergenerational transfer of wealth and how that is managed. So I think some of the measures are directed towards that, and there's going to be some very interesting interesting conversations with our clients over the coming weeks, months and years, about how we pivot, how that advice would previously been given, and how it will be now given.

Julie Abdalla: 8:52

You can see the clear intention behind some of these measures with what the government is trying to address. But in many cases, it feels like the policy ambition is a bit stronger than where it's actually landed in the measures that have been announced.

Tim Sandow: 9:09

Yeah. Well, let's start getting into some of those measures. And I guess the three main ones that really stood out, and in some ways these were signaled well ahead of the budget around the CGT discount, negative gearing and the taxation of trust, although that probably only came up a bit later in the piece, that's sort of something that feels like it's only been in the last week or two that that's started to get some some airplay. So maybe we start with the CGT discount. So we'll go into the details we covered tomorrow, but just interesting in thoughts around and maybe this is a good one for both Chris and Jane. Just sort of as far as the initial reactions to a change from the 50% CGT discount to an indexation regime.

Chris Jenkins: 9:52

I don't think anyone loves it, and I think that it's adding complexity. We've got assets that are going to be subject to a CGT discount up to 30 June next year. From that point on, it's indexed. There's a whole bunch of administration that needs to happen around that, I think that you know, to Julie's comment before I can understand, like the headline, sort of political aim. But I think we've sort of missed the mark with how this has been delivered. And so it's going to raise a lot of conversations with clients around well, what do we do now? Do we sell up and get out or I think there's a lot of it's fueling that uncertainty, and I think that's further reducing people's confidence in whatever it is they're wanting to do.

Jane Harris: 10:33

Yes, we're all going to have to learn how to use the spreadsheet. I'm a lawyer who doesn't like numbers. That's why I stopped being an accountant. Dividing by two, I could cope with I think I'm going to struggle with ,some of our lawyers are going to struggle. But more importantly, I think some of the clients, it just makes it much more complicated when they say, Well, how much is it going to cost me? Or, excuse me, I've got to go calculate a little bit for longer, rather than just saying, well, here's your proceeds divide by two. Let's estimate at that. So it is introducing that complexity to explain to clients. We've also got a timing issue about how it's going to be introduced. You can see that they've got a date of 1, July 2027, where it looks like we might have some very busy valuers in the country. I'm trying to work out some of those things. So it's going to be interesting. So yeah, how that plays out, and how we go about explaining that to the clients.

Julie Abdalla: 11:25

You've also got different rules for new builds and the option to choose between the 50% discount or the new rules, which is introducing a new tiered system and another layer of complexity.

Tim Sandow: 11:39

Yeah, I think that's right. I mean, it is interesting, isn't it? They've decided to say for gains up until 30, June 27 it's going to be the 50% CGT discount for gains after that, it's indexation. I mean, I guess compared to the late 90s, when we used to do the indexation calculations, and you'd look up the appropriate tables in the back of the master tax guide, or wherever, hopefully, technology, and there'll be, I'm sure all the software providers will have some tools where you just plug in dates and it just calculates it for you. But it was interesting that they have, they've effectively got two methods that they talk about in their fact sheet, which is about either a valuation at 30, June 27 or some kind of an apportionment type methodology. And I was intrigued that they put that valuation option in there, because some of the commentary before the budget was about whether there might be some ambitious valuations that are done at 30 June. I don't know if you've got any thoughts about that. And Chris, you do some valuation work, you'd never put in a value that was

Jane Harris: 12:38

Optimistic.

Tim Sandow: 12:39

optimistic?

Chris Jenkins: 12:40

Well, could you even, at the moment, given how pessimistic everyone is, I think that for a number of assets, there will be a market value, though. So for a number of affected taxpayers, where there's, where they've got equity investments, or sorry, sorry, specifically, ASX listed shares, the price is there. And so that is easy. It's for everyone else that might have farm overseas or whatever, that will be far more difficult to come up with an appropriate value, and in those instances, you may find a much greater level of creative license being used.

Jane Harris: 13:12

Well, it's also a cost, direct cost,

Julie Abdalla: 13:14

Yeah, it's additional compliance costs.

Jane Harris: 13:16

The price of valuations has gone up, as with many things with inflation lately, but valuations, in particular, the prices have gone up significantly in the last five years or so. So this is sort of introducing a direct cost that any taxpayers without market priced assets are going to probably have to engage with.

Tim Sandow: 13:32

Yeah, and I think, I mean, there was a discussion yesterday in the in the Fin Review, even about, I think, JB HIFI bought Good Guys and the valuer had valued, I think it was the copyright at $60 million and the ATO had valued it at 4 million. So I think this is really where you know this record keeping is going to be absolutely critical around that 30, June 27, to be able to substantiate the decisions that you've made and values and so on at that time. It might actually be a nice opportunity here to talk about one of the surprises that was in the budget, which was around the pre CGT assets, where effectively, we're losing pre CGT status at 30, June 27 it looks like there'll be a market value required at that date for those assets. So just interesting comments. I mean, for me, that was a surprise.

Chris Jenkins: 14:18

Yeah, I was surprised by that. I think, though, for a number of pre CGT assets, to the extent that was property that's been renovated, you know, there may have been a point in time previously where those assets lost their pre CGT exemption anyway. I think it's the passage of time between 1985 and now has meant that a lot of those assets, well, possibly pre CGT may not be and I think that it has been an area of interest of the ATO, when they're reviewing something, it's like, Oh, you think this is pre CGT, do you? And so I think that that's, to be honest, probably a practical solution. Not that I'm suggesting it's popular. I don't like it, but I think that that loss is probably on paper, seems worse than the reality.

Jane Harris: 14:58

I think, given the decisions that people are now going to be making, and going back to where we started with, what are the clients going to be asking us? What are the planning that's going to happen in the immediate aftermath of this? There's going to be a lot of people looking at selling their pre CGT assets, which is likely going to lead to quite a lot of analysis that advisors are going to have to do for those assets that are owned by entities to work out whether division 149 has been triggered at any point up until that point, so that they can quantify what the capital gain would be if there is any capital gain. So I think we're all going to be very busy doing that. I do quite a lot of that work, and sometimes if we have to dig back and get records, or we have to go to the ASIC micro fish to work out what the changes in ownership have been. That can be quite a lengthy process. And if we're on a we've got a decent deadline, but if we're on a deadline to dispose, if that's what the client wants to do, then that work is going to have to be done within a fairly short time frame.

Julie Abdalla: 15:55

The interesting thing on that, from a policy perspective, is the influence of the tax settings on taxpayer behavior. So you can see from these changes, we're already hearing that people will be frantically exchanging contracts yesterday, or having these changes drive their decision making, rather than other factors, other commercial factors.

Tim Sandow: 16:20

Yeah, and Julie, in the lead up. And over the last week or two, we've been having some discussions as well and saying, Well, look, in some ways, you could see that change was always going to happen. It was the grandfathering or the transitional rules, which were always going to be the thing that everyone was interested in, which has led to some people probably signing contracts in the last few days.

Julie Abdalla: 16:39

Well, we've been talking about CGT reform and the discount itself for many, many years, and there was, you know, the Senate inquiry on that earlier this year. But, I mean, from The Tax Institute's perspective, we've always said that this is something that can't be considered in isolation. It's clearly directed to dealing with some housing supply issues. But this will not, on its own, solve it. No matter what you change the discount to, then it needs to be part of a broader, coordinated approach.

Tim Sandow: 17:09

And it is interesting that they've done the change to all assets, because initially, some of those inquiries were talking about restricting the change to housing assets. So Chris and Jane, do you think we are going to see, I mean, on Julie's point, about the tax changes then leading to behavioral changes. Do you think we will see a lot of assets coming onto the market before 30, June 27?

Jane Harris: 17:28

I think so.

Chris Jenkins: 17:29

Yeah, absolutely. Or, if not on market, possibly being the holdings being restructured in a way that makes more sense for the taxpayer?

Tim Sandow: 17:38

Yeah, I think that's right. Interestingly, I don't think there's any change to the 1/3 discount for super funds.

Jane Harris: 17:44

Correct.

Tim Sandow: 17:45

It's just the 50% discount for individuals and so on, which is interesting. Maybe it's gone to the next point then around housing and the negative gearing changes. So obviously, we've got the rules now about it only be there's quite a complex set of whether you bought the house.

Julie Abdalla: 18:00

Another tiered system again.

Tim Sandow: 18:02

Yeah, another tiered ssystem, which we'll go into a lot more detail tomorrow. But essentially, if you're already in the system, if you've already got your negatively geared property or properties, you'll be fine. But then going forward, you'll be able to if they're existing properties, then it's only until 30, June 27 and then after that, it's only on new buildings. So what's this going to do?

Chris Jenkins: 18:23

Good question. I think it will cause people to alter their behavior. I don't necessarily think it will mean that they're disposing of rental properties, particularly pre existing properties. I suspect there's going to be an uptick in inquiry on interest only loans to maintain the negative gearing sort of element to rental properties. That was something that was announced last night, that they're expecting negative gearing to trail off over the next five to seven years anyway, which was sort of what the government had modeled. And that assumes everyone stays on P&I loans, but I suspect, as I said, there'll be much greater deal of interest in interest only loans now for pre existing rental properties. I think the fact that commercial property is excluded that may see people increase their interest in investing in the commercial property market, but it's another burden on residential property investors. There's been increases in land tax, not relevant to this conversation. But the as an investment class, residential property has been hit post covid with increasing cost, and it's really not adding up anymore in the same way that it used to. And so I do think we'll see a rebalancing of investments by clients and away from older residential property, which I suppose was the intended policy impact. But yeah, I don't know whether it's going to be well planned or a measured response.

Tim Sandow: 19:45

I can see advisors being very busy in this next period of time, because you're going to have the clients who've got the existing negatively geared grandfathered property, which in some ways is sort of gold until it turns positive, but then they'll also have that thought in their mind that, oh hang on, from 30, June 27 I lose the 50% CGT discount. So even though it's a grandfathered asset, do I cash out now and take advantage of the 50% discount? So it's going to be a very interesting time for advisors.

Chris Jenkins: 20:13

And I think if, depending on what people's outlook on the property market is, because post 30, June 27 it's indexation on the gain from that point. And so if the property market flattens out because of increased interest rates and all the other things that are going on external to the budget measures, there may not be that much gain anyway, from 30, June 27 so maybe people will hang on and try and weather the storm.

Julie Abdalla: 20:38

We hope you enjoyed this episode of TaxVibe. To see the full webinar and access other member only insights and resources, become a member of The Tax Institute. Head to our website to learn more. Please join us for the next TaxVibe soon.